Graded Coins: Advantages and Disadvantages

A graded coin is the result of a subjective view of a person working for one of the grading services.  Most are right on the mark if the grading service is careful in hiring the graders, but even the top services can err due to the subjectivity of the art of grading a coin.  In the current market where uncirculated coins are given a number from 60 through 70 the differences in the adjacent grades is minute, and errors can be easily made.

If a coin is graded a collector can purchase it with added confidence.  In higher grades one level, say from a MS-65 to a MS-66 grade, can mean quite a bit of difference in value.  So, a graded coin gives some confidence to the purchaser of a coin.

The other advantage is authenticity of the piece.  A reputable grading service will not place a counterfeit or altered piece into a slab.  Remember, such things as changing a mintmark can significantly change the value of a coin, so if it has been altered it becomes worthless to a collector. 

A grading service can also provide a value for a graded coin, other than new coins that are still being produced.  Unless the coin is so rare it needs to be bid to establish a value, or is too new, most graded coins have a value associated with them on the grading service’s website.

There is an unfortunate situation in that counterfeiters, especially in China, are not only counterfeiting coins but also the slabs.  The grading services are constantly changing their slabs with hidden marks and holograms to combat this threat.  But, one quick thing one can do is to look up the serial number online.  If the serial number indicates a nickel and the coin is a quarter, there is a problem.  The matching of serial numbers is not yet in common use by the counterfeiters.

Also, when the serial number is checked there will be a value.  It should be slightly higher than if the coin were not graded.  Grading coins is expensive, so having a graded coin should involve including the cost of the service.

Many collectors do not like coins encased in plastic.  They want to view even the edges on the coins.  So, they break the slabs and remove the coins.  The coin still is the grade it once was, but no longer can the collector recoup the extra value associated with having a graded piece. 

Coins are subject to environmental damage.  If a coin had been improperly handled prior to being placed in the protective slab the coin could react to whatever was left on it, and later changes can occur.  Look at the coin, especially if it has been encased for a long time.  This can be determined because the slabs and labels have gone through changes over the years, so an estimate of about how long a coin has been encased is possible.

The serial number on the slab is unique, and can be used to help identify your property in the event of theft.  Keep a record of the serial numbers separate from your collection.  

Slabs are rectangular, and can be easily stored.  In fact there are boxes designed to hold graded coins.  However, the labels make the slabs larger than other protection one might apply to coins, such as capsules or flips.  The slabs take up space.  But they offer excellent physical protection of the coins in them.

Be careful when buying a box.  The different grading services use slightly different size slabs, so make certain your graded coins will fit well into the box.

The choice of whether or not to have a coin graded, or pay a little extra for a graded coin, rests with the collector.  The security that an expert in grading has proclaimed the coin a certain grade, albeit subjectively, and authenticity must be weighed against the extra cost and the inability to see the coin outside of the slab.  In addition, to not have a graded coin places the responsibility to protect the coin against physical and environmental damage on the owner of the coin.

Even a graded coin cannot give the province or history of the coin.  The only way to be certain your coin was not stolen, then later encased in a slab, is to purchase directly your coins directly from a mint.   

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